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While the way you're describing it, everything APPEARS to sound valid from an SEO perspective, and it is POSSIBLE your compliance officer is not understanding of the world of online linking, in reality, as frustrating as it might be in this specific instance, the better approach might be to not try and push the issue.

Instead, I might suggest seeking a discussion about the nature of linking, "implied relationship", "implied association", and the broader and more general concerns / implications.

If I ready that right it would be like if I live in City A and there is a company that cannot sell refrigerators in City A, but can in City B. The company writes a blog article about Buying refrigerators in City A, then links to their page to buy refrigerators which anyone in City A cannot purchase. It doesn't make sense from a user experience standpoint, so you must just want the link (obviously)...To me there is one way to make the compliance people happy (maybe) and provide a better user experience for anyone that may read it, have a link to:

Buy refrigerators in City A

Buy refrigerators in City B

Still gets your link, but forces you to put a link to another site that does provide the product that you cannot to the target region.

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